The 2023 January transfer window was the most chaotic and extravagant of all time. Well, at least for the Premier League, leading to questions and accusations of cheating from many, including La Liga, as to how this can happen. I am here to answer those questions.
The Premier League spent 1 billion dollars in January, and at the root of that was Chelsea, who spent 370 million, which was more than the rest of all the clubs in the big five leagues combined. Is this simply because of wealthy ownership? No, that can't be the case because even premier league clubs without exceedingly rich owners, like Nottingham Forrest and West Ham, spent the third and fourth most money in Europe last summer. Okay, then, are these clubs violating UEFA's financial fair play? Well, not really. Their spending is within bounds because of the revenue they are earning. The answer is far more layered.
The wealth in the premier league from top to bottom is the result of decades of excellent management by the English FA and the egalitarian system they have created.
Broadcasting revenue is by far the highest source of income for sports leagues. The Premier League leads the way in distribution parity, with the team receiving the lowest share still earning 63% of what the best-paid team does. That is almost double the Serie A in second place with 32%. Ligue 1 and the Bundesliga rest at 31%. And La Liga stands as the worst at 28%.
Because of decades of splitting broadcast revenue as evenly as possible through the league, the Premier League became more competitive than its counterparts, which made it more attractive to global fans, which then made it a priority to many of the world's best players, which in turn made it attractive to prospective owners, all leading to a cycle where the premier league grows more and more popular and profitable.
The Premier League understood early on that while it would be easier to cater financially to the biggest clubs in the short run and what that would mean for European Trophies, in the long run, it would be much better if they spread the wealth.
Ironically La Liga complains about the disparity in spending when they have been chief to their demise because of their insistence to only cater to Real Madrid and Barcelona for decades.
Take the 2021/22 season. Last place in the Premier League earned 63% of what first place did in broadcasting revenue. Meanwhile, in La Liga, Mallorca received only 28% of what Real Madrid did for the 21/22 season. It's been that way for years now, contributing to the weakening of the league.
Real Madrid and Barcelona greedily hoard most of the broadcasting revenue, allowing them to separate themselves further from the rest of the league each season. And it worked for a long time. But the rest of La Liga starved while they got to eat. It's shortsighted thinking.
While it benefits the two giants in the short run, it is a massive detriment in the long run because it makes the league less attractive to prospective players and fans, making the product less watched, resulting in commanding less money in a competitive sports broadcasting revenue market.
The Premier League will earn $3.1 billion in broadcasting revenue this season, more than twice the $1.5 billion of La Liga. But go back to 2010, and the Premier League was only earning $300 million more than all of La Liga. What happened? The product became less attractive as the two giants continued to separate themselves from the rest of La Liga.
It's how we got to the 2021/22 season, where the 147 million dollars Wolves earned for finishing 12th in the premier league was more than the $141 million Atletico Madrid got for finishing 3rd in La Liga. And the $119 million Sheffield United earned despite finishing last was more than twice the $49 million the club with the least in La Liga did.
And I do not mean to pick on La Liga, but they are the ones who chose to complain. They recognize that they now have more competition in the Premier League to fight with for the best players and managers. Their status in the game is at risk, and they are lashing out.
Whether purposeful or not, the Premier League established a structure that made the league more competitive over decades, and we now see the results of that. And if other countries want to compete in the future and rival the spending of the Premier League, they'll have to grow the balls to stand up to the clubs at the top of the pyramid (I'm looking at you, La Liga). Enforce a system that rivals the revenue split of the Premier League.
You are only as strong as your weakest link.
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